What is CRM?

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Let’s step back to the basics and revisit what exactly is CRM. SMBedge.com recently launched a new section called CRM Advisor and this is their first story with the following introductory tutorial.

Firstly CRM is not technology nor is it something you can touch or
feel. It was during the dotcom days that led many people till today to
think of CRM as technology. For those who have implemented CRM
technology for the sake of technology (which is quite ironic but
common) obviously had to find business challenges to solve otherwise it
will die a natural death or become pretty much a white elephant. A
classic mistake made by many organisations in implementing CRM
solutions, a horse before the cart approach.

As the acronym CRM suggests, “Customer Relationship Management is your
methodology of the way you do business with your customers supported by
information, processes and most importantly the value-based
relationship you have established with your customers over a period of
time.”  What is not mentioned in this definition but critical to the
success of just about every CRM method in the world is measurement. It
was once said that if you can’t measure it you can’t improve it and we
all want to do things better and deliver more with lesser resources and
costs. Measurement of CRM performance is best supported by CRM
technology and we will certainly spend some time on this topic.

Let
me break this definition down into its respective key elements.
Information is the first element in my definition and it is the “blood”
of CRM as it is the human body. It carries the things you need to
knowing about the kind of relationship you have with your customers and
how to improve the profitability of these relationships. And to create
this ”blood” you need to capture and organize the customer
transactional data in an easy to retrieve and understand manner.
Without customer interactions and transactional data, managing complex
customer relationships in today’s business environment can be very
daunting or unproductive or both if you have a fairly complex customer
life cycle. Most businesses have presales relationships and post sales
relationships with their customer. Transiting from one stage of the
relationship to the other is key and data captured along the way is
important to ensure visibility of this the two types of relationships.
It promotes better communications between all internal parties involved
in the entire presales cycle and post sales cycle. This in turn
translates to better customer satisfaction which hopefully will have
positive impact on financial statements. Processed information becomes
knowledge and used-knowledge becomes experience. Information is at the
top of the knowledge chain and it is vital that accurate data is fed
regularly into the organisation to keep a close watch and understanding
of your business.

The second element is processes. Process is the element that promotes
consistency in what you do. It also enables measurability of business
performance and when broken down into simpler forms it can measure
individual performance. Customers prefer predictable positive
experiences with their suppliers as we are mostly naturally risk
adverse people. Hence with processes our customer can expect
consistency in the business experience when they interact or transact
with us. Knowing what to do next and being able to anticipate
customer’s needs is a key value–add to establishing a productive and
profitable relationship with your customers. Another aspect of
processes is it helps to break down complex tasks into digestible steps
for senior and also new staffs to follow. Changes are inevitable and
processes help to deal with changes in a more structured and systematic
manner breeding consistency amidst changes within an organisaton.

The
third element of my definition is value-based relationship, this I
believe is the linchpin to loyal customers. Customers are truly loyal
to one thing and one thing only, the value you deliver to them
commensurate with the price they pay you. It is vital that we find ways
to install barometers to gauge this value and ensure its equilibrium.
Any changes to this equilibrium and the balance of the relationship
will change accordingly. There are many different forms of value, some
very perishable with short shelf life and some very durable with long
shelf life. Some are easily replicated while some are harder to
replicate. Keeping track of the kind of values that bring your
customers to you and staying with you helps to better understand your
business. I believe CRM holds the key to unlock this value-based
relationship and bring it to the next level.

The last element
in the definition which is the scarcest resource in the world is time.
You need to manage and bring all the elements of CRM together and make
it work within a certain period of time. Every company has a financial
year and performance is often measured over this period of time. This
includes your customers’ financial period and measurement periods for
different projects and business initiatives. Hence it is vital that you
are able to manage and meet the challenges within a specific period of
time that each of the elements brings to the table to deliver the value
your customer is willing to pay you. This means data captured has to
have some association of its relevancy with time, processes has to be
efficient ensuring the shortest route to achieve its objectives and
value have to stand the test of time. If not you will have to innovate
or create new value to attract your customers. Without the element of
time there will be no pressure to deliver and efficiency will not make
any sense.

Having defined what CRM is and to bring everything into perspective we
need to measure how CRM initiatives and projects fair compared to its
set Key Performance Indicators or KPIs. This is where we decide what
kind of data to capture and how efficient the processes are not
mentioning the performance of the people who execute the tasks.
Essentially and broadly categorized there are two types of indicators,
leading indicators and lagging indicators. Example of leading indicates
are things like number of leads, number of telemarketing calls,
pipeline and mainly indicators that tell you how well you are doing
your job now. Lagging indicators are usually after the effect things
like revenue, profits and assets. Much emphasis has to go into
measuring leading indicators as it is a more proactive approach. It is
certainly better to know from your leading indicators if you are going
to meet your objectives than to know from lagging indicators that you
have missed it.

Last
but not least, this article is about technology or CRM technology in
specific. Technology is only an enabler but an important enabler. Very
often it determines what can be done, how it is done and the ease of
execution. Typically we hope to implement as much automation as
possible to cut down the time and also to simplify the cognitive load
of the users in executing the tasks using the technology. It is
important that when we implement the technology there is much
flexibility to design the technology to work in synchronisation with
the way we think when executing the processes. This obviously makes the
execution of the processes using the technology to support it more
pleasant and productive. Without going too deep into this topic one
very critical aspect of technology consideration is usability and ease
of customisations. This has direct impact on adoption rate and adoption
rate is absolutely vital to the success of CRM projects. If no one
wants to use it then there is no data and processes will costs twice as
much to follow. Measurement will be virtually too costly if not
impossible to carry out.

In conclusion CRM is the way you do
business with your customers and managing this value-based relation in
a systematic and productive manner can yield long term gain for your
business.

Article Source: SMBedge.com – What is CRM?

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